An economic model of the market for hospital treatment for non‐urgent conditions

Abstract

This paper develops an economic model of the market for treatment of waiting list conditions, in which complainants choose between private treatment, NHS treatment and no hospital treatment. This choice depends on a number of clinical and non‐clinical factors, which enter the demand functions for private and NHS treatment. Among the key influences are the price of private treatment and the expected duration of wait for NHS treatment, both of which are endogenous variables in the model. Given a pair of private sector and NHS supply functions, expressions are obtained for the price and expected wait at which demand and supply are simultaneously equated in both the private sector and the NHS. The paper concludes by exploring the responsiveness of the equilibrium to various demand side and supply side shocks.